Making strategic tax-saving investments is a great way to reduce your overall tax liability in a given financial year. ELSS or Equity-Linked Savings Scheme funds allow you to save tax under Section 80C of the Income Tax Act, 1961, up to Rs 1.5 lakh and also build wealth by investing in equity markets. ELSS funds come with the shortest lock-in of three years among tax-saving options. Here are the top 4 ELSS mutual fund investments you should consider in 2024.
ICICI Prudential ELSS Tax Saver Fund
ICICI Prudential ELSS Tax Saver Fund is one of the top-performing ELSS funds with a strong track record. The fund has consistently delivered high returns – the one-year CAGR of the fund is 28.63% as of May 31, 2024.
It adopts a multi-cap strategy focused predominantly on mid and small-cap stocks. The fund managers invest in high quality stocks across sectors like financials, consumer, IT, pharmaceuticals, and construction that have good growth potential. With a diversified portfolio of around 50 stocks across market capitalizations, ICICI Prudential ELSS Tax Saver Fund has consistently outperformed its benchmark and category. The fund’s long-term performance makes it a good ELSS option for investors looking for tax savings as well as wealth creation over the long term.
PGIM India ELSS Tax Saver Fund
This ELSS fund from PGIM India Mutual Fund has consistently been a top performer in the category. The fund has delivered an annualised return of 7% as of June 30, 2024. The fund follows a bottom-up stock selection approach. Some of the major sectors it invests in are financials, consumer, IT, and pharmaceuticals. PGIM India ELSS Tax Saver Fund makes for a good tax-saving choice this new financial year.
Axis ELSS Tax Saver Fund
Axis ELSS Tax Saver Fund is among the largest and most popular ELSS funds. The fund has amassed over Rs 37,106.30 crore in assets under management as of June 30, 2024. Its one-year CAGR as of June 30, 2024, is 29.86%. Axis ELSS Tax Saver Fund predominantly invests in large-cap stocks, with some allocations to mid-caps. It follows a flexi-cap strategy.
The fund managers adopt a bottom-up approach for stock selection based on a 3D framework of good quality, positive momentum, and reasonable valuations. The fund’s portfolio is well diversified across sectors. With its consistent long-term performance, Axis ELSS Tax Saver Fund can be a good ELSS fund addition to your portfolio.
Kotak Tax Saver Fund
Kotak Tax Saver Fund is a multi-cap fund that aims for long-term capital appreciation, with 80% investment in equity and the rest in debt and money market instruments. The fund adopts a bottom-up stock selection strategy and focuses on investing in good businesses run by quality management available at reasonable valuations.
The portfolio is currently overweight in sectors like financials, construction, FMCG, and IT. Kotak Tax Saver has generated over 23% returns over the past 5 years. With its consistent long term performance, Kotak Tax Saver can be considered for ELSS investment this financial year.
To sum up
ELSS funds help you save tax under Section 80C while creating wealth over the long run. They come with the lock-in of three years. The top-performing ELSS funds as mentioned above can be good options to invest this financial year for tax planning as well as wealth creation. Investors should carefully evaluate funds based on past performance, portfolio characteristics, investment strategy and their own risk appetite before investing. It’s also important to note that Section 80C tax benefits are only available to those opting for the old tax regime while filing their income tax returns. Under the new tax regime, this tax deduction cannot be claimed. Hence, it’s essential to consult your accountant when investing for tax-saving purposes.
